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Update on National Defense Authorization Act and Congressional Activity

On December 18, House and Senate Armed Services Committee conferees filed a conference report on the fiscal year 2013 Defense Authorization Act (H.R. 4310).  The National Defense Authorization Act (NDAA) is now likely to be voted on by the full House and Senate on December 20, and then forwarded to the White House for the President’s signature. 

AIA’s priorities fared well in the final bill with several issues resolved in a manner that is positive for the aerospace and defense industry.  In general, the final conference agreement supports our troops in the field and helps sustain our industrial base in this time of uncertainty. Among bill highlights are the following.

• Satellite Export Control Reform (Sec. 1261).—After more than a decade, the new legislation returns authority to the President to determine appropriate export control requirements for commercial satellites and related technologies.  This comes thirteen years after Congress mandated the imposition of inflexible, military-level controls which have undermined U. S. global competitiveness in this critical field.
• Depot Management (Sec. 322).—The agreement repealed the depot provisions enacted last year and restored original law with some minor changes.  The fiscal year 2012 legislation would have presented a number of challenges to the private sector and could have resulted in a loss of substantial workload while costing the American taxpayer billions of dollars. 
• Commercial Items (Sec. 831).—The agreement does not include proposed changes to the Truth in Negotiations Act (TINA) that otherwise would have led to additional costs for the industry and would have driven many of our companies to stop selling products to the Pentagon.  The conference agreement, however, will require AIA to continue working with the Pentagon on their development of guidance on how best to determine price reasonableness for commercial items.  
• Contractor Compensation (Sec. 864).—The agreement deletes the Senate’s proposed fixed amount of allowable contractor compensation and leaves in place the current formula-based approach that AIA supports.  While this is a very positive development, the conferees requested a report on this subject from the Government Accountability Office, which indicates this issue will remain of concern.  There also remains a government-wide provision in the Senate-reported version of the fiscal year 2013 Financial Services Appropriations bill (S. 3301), that proposes a fixed amount.  We will continue to monitor any year-end appropriations legislation and advocate that they follow the lead of NDAA conferees on this important subject. 
• Alternative Fuels (Sec. 315).—The agreement provides flexibility for the Pentagon to continue its investment in the development of alternative fuels and for them to continue participating in the multi-agency program that is developing a national biorefinery capacity.  This is a high priority issue for DOD and will also support the global competitiveness of our commercial aviation manufacturers.

Overall the NDAA authorizes $631.4 billion for defense activities, $525.8 billion for the base Defense Department budget, $88.2 billion for Overseas Contingency Operations and $17.4 billion for the Department of Energy and other national security programs.

On November 27, the House Republican Steering Committee announced its selection of full committee chairs for the incoming Congress.  There are at least seven new chairmen, largely due to the six-year term limit rule.  The only waiver of the term limit rule was provided to Rep. Paul Ryan (R-Wisc.), who will return as Budget Committee chairman next year.  The new chairs are: Rep. Jeb Hensarling (R-Texas) – Financial Services; Rep. Lamar Smith (R-Texas) – Science, Space and Technology; Rep. Bill Shuster (R-Penn.) – Transportation and Infrastructure; Rep. Ed Royce (R-Calif.) – Foreign Affairs; Rep. Michael McCaul (R-Texas) – Homeland Security; Rep. Bob Goodlatte (R-Va.) – Judiciary; and Rep. Pete Sessions (R-Texas) –Rules.

On Wednesday, December 5, the House Democratic Caucus elected its slate of Ranking Democrats for House committees for the 113th Congress.  Of special importance to the aerospace and defense industry are the re-election of Rep. Adam Smith (D-Wash.) on Armed Services; the election of Rep. Nita Lowey (D-N.Y.) to fill the vacancy of Rep. Norm Dicks (D-Wash.) on the Appropriations Committee; and the election of Rep. Eliot Engel (D-N.Y.) to fill the vacancy of Rep. Howard Berman (D-Calif.) on the House Foreign Affairs Committee.

AIA Source: cory.hitt[at]aia-aerospace.org